Japan, Australia Stock Futures Rise on G-7 Support Pledge
Japanese and Australian stock futures rose as finance ministers and central bank governors from the world’s leading economies agreed to coordinate their response to Europe’s financial crisis and U.S. service-industry growth tempered concern the world’s largest economy is slowing.
American depositary receipts of Komatsu Ltd. (6301), a mining equipment maker that gets 23 percent of its sales in the U.S., advanced 1.9 percent from the closing share price in Tokyo. Those of Sony Corp. (6758), Japan’s largest exporter of consumer electronics, rose 1.1 percent. ADRs of BHP Billiton Ltd. (BHP), the world’s No. 1 miner, gained 0.9 percent as commodity prices climbed.
Futures on Japan’s Nikkei 225 Stock Average expiring in June closed at 8,455 in Chicago yesterday, up from 8,410 in Osaka, Japan. They were bid in the pre-market at 8,450 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index advanced 0.2 percent today. New Zealand’s NZX 50 Index rose 0.3 percent in Wellington.
“A substantial amount of Europe-related global economic damage is already embedded into market expectations,” said Michael Kurtz, Hong Kong-based global chief equities strategist at Nomura Holdings Inc., Japan’s largest brokerage. Stocks should “claw their way higher in coming weeks amid more evident policy support.”
U.S. service industries sustained their pace of growth in May, showing the biggest part of the U.S. economy is withstanding the impact of the European debt crisis.
The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, unexpectedly rose to 53.7 points last month from April’s 53.5, the Tempe, Arizona-based group said today. The median forecast of 75 economists surveyed by Bloomberg News projected 53.4. Readings above 50 signal expansion.
Finance ministers and central bank governors from the Group of Seven economies agreed to coordinate their response to Europe’s financial crisis on a conference call yesterday. G-7 officials said they will work together to help Spain and Greece place their public finances on a sustainable footing, Japanese Finance Minister Jun Azumi told reporters in Tokyo following the call.
The yen fell against the dollar as Azumi indicated G-7 nations remain supportive of intervention to address extreme currency moves. A weaker yen boosts earnings for Japanese exporters earnings when repatriated. The yen dropped 0.5 percent to 78.75 per dollar yesterday, extending its decline to 0.9 percent this week.
Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The index advanced 0.2 percent in New York yesterday.
The MSCI Asia-Pacific has fallen more than 14 percent from its peak this year on Feb. 29. The measure slumped 10 percent in May, the biggest monthly loss since October 2008, when global markets tumbled following the collapse of Lehman Brother Holdings Inc. Equities continued declines this month amid concern growth in China and the U.S., the world’s biggest economies, is slowing and as Europe’s debt crisis deepens.
The MSCI Asia-Pacific (MXAP) fell 3.2 percent this year through yesterday, compared with a 4.1 percent drop on the Stoxx Europe 600 Index and a 2.2 percent gain on the S&P 500. Declines in regional equity markets cut the average price of stocks on the Asian benchmark to 11.2 times estimated earnings, the lowest this year. That compares with 12.3 times for the S&P 500 and 9.8 for the Stoxx 600.
The Thomson Reuters/Jefferies CRB Index of raw materials climbed 0.1 percent yesterday, a second day of gains.
Chinese stocks traded in New York advanced for the first time in five days, with China Eastern (CEA) Airlines Corp. leading gains, on prospects measures to boost consumer spending in Asia’s biggest economy will spur growth. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. rose 1.3 percent to 87.87 in New York yesterday, snapping a four-day slump.
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